IDC: Malaysia’s Vision 2020/25 to be Fuelled by Strong Public Private Collaborations

In its timely presentation to the media on August 14th, IDC ASEAN sounded out an exhortatory call – the call for a strong public and private collaboration, in order for Malaysia to step up in its “digital economy” game. What a difference three months make…. and now Tun Dr Mahathir, back in the driving seat, sees his Malaysian Vision 2020 to be achievable only in 2025.

What does it take to play catch up?

Since Malaysia’s independence in 1957, the nation’s economy has diversified from agriculture and commodity-based industries to developing robust manufacturing and services-based sectors. In the 80s, the technology sector was identified as outperforming most other sectors by driving the country’s gross domestic product (GDP). In fact, earlier this year, IDC revealed that Malaysia’s IT spending is expected to reach US$10 billion by end of 2018, albeit 70-75% of that being still in hardware.

However, the investment in digital infrastructure, software and expertise are the fundamental areas to focus on, to bridge the digital divide and drive the economic growth towards Vision 2020/25.

Unfortunately, according to IDC’s Market Perspective: Nations and Internet of Things: A Comparative Assessment, today Malaysia is ranked a mere number 8 out of 13 Asia Pacific countries in terms of IoT Readiness. This study looks at these factors in its comparison: a nation’s GDP, government effectiveness, innovation, Internet of Things (loT) spending and lCT spending.

It is IDC’s view that Malaysian enterprises’ risk-averse tendencies “to keep everything in-house” (e.g adding more servers) instead of fully taking advantage of cloud facilities has put a dampener of sorts to their efforts in truly transforming digitally.

“As the nation aims to establish a scientific and progressive society, this requires the most cutting-edge research, innovations and technologies for us to achieve these goals. This means more investment in software, applications and fundamentally, being cloud and IoT-ready”, Sudev Bangah, Managing Director of IDC ASEAN, explained.

Sudev Bangah

Randy Roberts, Research Director IoT and Telco, IDC Asia Pacific added, “Malaysia is one of the countries that has organically been moving towards being extra opportunistic in the utilisation of ICT. The new government should implement new ways to achieve the vision especially in areas of research and development, infrastructure and science and technology. We have to start identifying how emerging technologies, or IDC’s “innovation accelerators”, such as Augmented and Virtual Reality (AR/VR), Cognitive/AI Systems, Next-Gen Security, IoT and Robotics can create new value for Malaysia to be on the same footing as other developing countries.”

Randy Roberts

“Ultimately, the public sector should start considering how the ICT industry can fully benefit from the digital economy as well as create economic areas of new growth, be it in jobs, sectors or physical locations. A joint effort between the public and private sector will create the foundation to increase GDP, foreign investment, technological experience and expertise in the country”, said Sudev Bangah, Managing Director of IDC ASEAN.

Accessibility of broadband

Fixed broadband penetration (“FBB”) was less than 80-percent at the end of 2016 in Malaysia with an average speed of 23Mbps. Of these 80%, almost three-quarters experienced low service quality with speed <10 Mbps, while one-third had speeds of <4 Mbps. About two-thirds of customers only had a single choice of broadband provider.

As for mobile broadband, the number of 4G subscribers surpassed 3G in 2016, however, the vast majority experienced poor quality connections with a good signal available less than 40-percent of the time. 1.82 million Malaysian households do not have fixed broadband nor mobile data at home.

Now…. everyone can surf?

Despite the alarming statistics above, this is not an unrealistic rhetoric. Indeed, todate, there have been progressive initiatives from the new government with the recent proposal to include “the right to internet access” in the Federal Constitution. Initiatives such as this will directly drive the digital economy and GDP and create more engaged and connected citizens. Limitless internet facilities will no doubt spur a forward looking society that will be a contributor to the scientific and technology civilisation.

Today, we have 2 out of 3 citizens in Malaysia using social networks, messaging, news, articles forum, banking and e-commerce daily with internet connections. The limitation of internet connectivity is one of the key factors to the slow progress towards vision 2020. The increase in internet connectivity will be a significant contributor in connecting remote citizen populations (such as in the inner regions of East Malaysia) to online markets, increasing their access to healthcare and government services, and expanding exposure to news and media.

The other big spend is expected to be in consumer B2C (RM614 mil) and transportation (RM491 mil) sectors. Think of health and fitness sectors (e.g. Fitbit wearables) and smart home security systems, to name a few. Think of increasingly connected cars (which flags out maintenance issues, contains telemetry and provide up-to-date infotainment), etc.

Therefore, in its media presentation, IDC named the urgent need for full broadband coverage to be extended throughout West and East Malaysia as a priority for consumers and enterprises, bearing in mind that the East Coast and East Malaysia account for 30% of the population. All groups will benefit from the growth in online services such as e-commerce, online banking, real-time news and information with IoT being a big enabler. A close second in priority is that telcos should improve the affordability, quality and speeds of their networks.

This year, Malaysia slipped three spots to 27th from 24th in the World Digital Competitiveness Ranking, 2018. Indeed, the new government should stem further slips by setting an ambitious objective for our nation to be equivalent to leading countries in the region such as South Korea and Singapore, in its run towards Vision 2020/25, fuelled by the digital economy.

This is no doubt, not possible without a strong public private collaboration ecosystem.